Happy May Day! Can you believe 2017 is 1/3 over already? Is it strange that I think of everything in terms of percentages and fractions? It makes time goes by quicker for some reason. Pretty soon the year will be half over, then ¾, then 2017 will be gone. There is so much left to do.
April was a mixed bag for us. Our income was good, but we spent more money than usual as well. I got a Hyatt Chase card earlier this year because I wanted to get the sign up bonus of 2 nights stay at any Hyatt. The condition is we had to spend $2,000 in the first 3 months. However, I found myself in a bind because we usually don’t spend that much money. After 2 months, we were at around the $800 mark. That meant we had to spend $1,200 in April. Ugh! That’s why I dislike trying to qualify for these credit card sign up bonuses. I end up spending more money than usual to fulfill those conditions.
At first, I thought I could get some grocery gift cards, but it seems gift card purchases don’t qualify toward the $2,000. Instead, I paid some bills ahead of time. I used the card to pay extra on the rental’s trash removal and water bills. We also paid ahead on RB40Jr’s kung fu class and ate out a bit more than usual. The result is a higher than normal expense month, but still under budget. I plan to use the 2 free nights at a Hyatt resort in Cancun later this year. They’d better be worth the trouble. If anyone knows a good tip on “manufactured spending”, let me know in the comments below. I’m not very good at travel hacking.
Okay, let’s go over my 2017 goals first and then see the details of our cash flow in April.
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At the end of April, the year is 33% over. It’s still early, but we need to be vigilant and not procrastinate too much. If you put things off, they will just be more difficult to accomplish later on. This is especially true on those goals that take all year to finish. Our savings goals for example are tracking around 33% and we need to keep it up. It’s best to not let these fall behind.
This is my goal scheduling spreadsheet. Things are generally pretty good. The only one that’s in trouble is the Pinterest goal. All in all, it’s not too bad for the first third of 2017.
- Save $50,000 in our tax advantaged account– We’re doing very well here and have saved $18,145 so far. This one is right on track.
- Dividend Income $11,500– I’ll update our passive incomepost next week and you can see the details there. In 2017, we received $3,637 in dividend so far. This is also right on track. Recently, I sold a few stocks when I heard Loyal3 is going to shut down. I’ll need to transfer the money over to our brokerage account and reinvest them.
- FI ratio > 78% – This is passive income divide by expense. Currently, our FI ratio is
71 %92% in 2017. ( I made a mistake in my spreadsheet.) That’s behind our goal of 78%.Okay, 92% is much better. I’m pretty happy with our FI ratio now. This one is actually pretty hard to track because a lot of dividends will be paid out near the end of the year. I’m cautiously optimistic that we’ll meet our goal.
- Net worth gain > VFORX– Our net worth gained 5.6% so far in 2017. That’s really good for just 4 months. However, it is about 1% behind our benchmark. The VFORX (2040 fund) is up 6.8%. That’s incredible. We’re behind, but I’m not going to worry about it. We’ll see how the rest of 2017 goes. The stock market can’t keep going at this pace.
- Move RB40Jr’s 529 plan to Vanguard– I sent in the paperwork so this should be done soon.
- Move Mrs.RB40’s IRAs to Vanguard– We sent in the paperwork for this one also.
- Online income > $36,000/year– We’ve been doing incredibly well this year and made $25,587 so far in 2017. We’re 71% to our goal and I’m really grateful to you, our readers. I was hoping to keep up this pace for the rest of 2017, but we’re seeing some slow down. Our online income will be down next month and probably stay down for the summer.
- Redesign Retire by 40– This one is a huge job and I’m not quite ready to start yet. However, I might as well get going in May. It will probably take a few months to complete.
- Pinterest > 25,000 visits– I’m trying to grow traffic from Pinterest. We are a quite a bit behind the target at the moment. I’ll need to do something different or we’ll never accomplish this goal. In April, I tried to be more active on Pinterest throughout the day, but it didn’t help much. I’ll keep at it…
- Fitness– April was a pretty good month for fitness. I made it to the gym almost every weekday so that was great. I also met my goal of 7,000 steps per day. In April, I walked about 7,250 steps per day. That’s not bad at all.
- Start a new site – Yes! I started a new site with a focus on fitness – Fit by 40. There isn’t much traffic, but that’s okay for now. I’m using it mostly for personal improvement. It’s working really well and I’m much more active this year than in 2016. I don’t know why blogging helps so much, but it works for me.
- Join Toastmasters– This one is scheduled for the 2nd half of the year.
- RB40Jr’s after school programs– RB40Jr is now going to Wushu (Chinese martial art) classes and soccer practice. He doesn’t like these activities because it’s hard for him. He’d rather stay home and play with the tablet, but he needs to learn to toughen up. Hopefully, these activities will help him develop more grit.
- See the total solar eclipse– I reserved a campsite at the beach. We’re set for August. I’m really looking forward to this trip.
- National Park– We visited Fort Vancouver National Monument over spring break. We decided to skip camping at a National Park because our summer schedule doesn’t have much time left.
- International Trip– We plan to visit Mexico in November. It should be a cheap trip because we have plenty of reward points to use on flights and accommodations. The Hyatt card mentioned earlier should help a lot. I’ve never been to an all inclusive resort before so it’d be interesting to see if we like it. Normally, we like to mingle with the locals.
Net Worth (+5.6% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. For 2017, I’ll make it simple and try to beat the Vanguard Target Retirement 2040 Fund, VFORX. Their current allocation is about 88% stocks and 12% bonds. I thought this was a good measuring stick and we should be able beat it. Now that we’re a third into 2017, I can see that it’d be really tough to beat VFORX if the stock market is doing well. Next year, we’ll probably just avoid benchmarking altogether. It doesn’t seem to add anything useful.
Our net worth increased about 5.6% so far in 2017. That’s amazing for just 4 months. For the rest of 2017, I’m going to be more conservative and bulk up our bond index fund. I’m very happy with our net worth gain so far this year so more bond would help steady the portfolio. We are a bit behind VFORX, but it isn’t a big deal to me.
Here is our net worth on Personal Capital. It went up about 1% in April so that’s great. The little dips are accounts being transferred.
If you need help keeping track of your finances, try using Personal Capital to manage your investment accounts. We have many accounts and Personal Capital helps us see the big picture quickly. Also, I’m a huge fan of their awesome retirement calculator. You can read my review here – The Best Free Retirement Calculator.
April 2017 Cash Flow
We had another very good month financially. Our income was much higher than average. Our spending was higher than usual, but still under budget so it’s not that bad. Let’s go over the details.
Take Home Income (target > $5,000)
Our take home income target is $5,000 and we came in above that at $9,861. Our income streams were all rolling in and we just need to keep it up.
Mrs. RB40’s paycheck: $5,193. Mrs. RB40 is doing very well at her day job. She got a raise this year and she is bringing in great income. That’s one reason why she doesn’t want to quit working full time yet. She also doesn’t want to deal with health insurance uncertainties at this point. The employer sponsored health plan is working really well for us.
Rental income: $569. Our rental income was lower than usual because I prepaid some utility bills. It should even out in a few months.
Online Income: $7,194. We had a fantastic month with online income. This year I’m focusing on increasing our income so Mrs. RB40 can retire sooner. I’m adding more affiliate links and focusing on writing relevant articles that will be helpful to investors. Here is how we generated online income last month.
- Banner ads: $1,461. These are the banner ads you see on Retire by 40.
- Affiliates: $5,885. These are referral fees from affiliate links. If a reader signs up for a service through our links, then we sometimes earn a referral fee. You can see an example from the Starting a blog post below. Q1 was really good for affiliate income and it is starting to slow down now. Next month, our income will be lower.
- Brand promotion: $300. I worked with a company to promote their brand.
- Expenses: -$453. Internet, email service, CDN, cell phone, hosting, meals, USPS, etc…
Starting a blog is a great way to build your brand and generate some extra income. Thank you for your support!
Dividend income: $1068. Dividend income was good in April. You can see our dividend portfolio here.
- P2P lending: $102. I’m slowing getting out of P2P lending. I just don’t think they will do well when the economy turns south.
- Realty Shares:$0. I funded my first deal at RealtyShares in January. It’s a commercial property in Arizona and it will payout once per quarter. We should see our first payment in May or June.
- KickFurther: $0. I invested about $1,300 at Kickfuther. Kickfurther is similar to P2P lending, but investors lend to small businesses instead of individual borrowers. The big difference here is the money will be used to fund inventory. The investors own the inventory and we can vote to liquidate the inventory if the business can’t sell it. You can read more about them next week when I go over our passive income.
Pre-tax savings: -$2,890. I sent $1,500 to my solo 401k. Mrs. RB40 saved $1,390 in her retirement account.
Expense (target < $4,500)
Our monthly expense target was $4,500 per month and we spent $4,265. That’s higher than usual in the cool season, but really not that bad in the grand scheme of things.
Housing: $2,289. This includes the mortgage, HOA, and property tax. Housing is a huge part of our monthly expense. We may have to move to a cheaper location to reduce this expense.
Cash Allowance: $200. I took out $200 because I wanted to buy a used bicycle. I picked up an old Specialized for $165. Probably overpaid for this one…
Groceries: $461. This is good for a family of 3. I’m pretty happy as long as we keep it under $500.
Transportation: $68. This is for gasoline and parking.
Kid: $542. We spent more money than usual this month on RB40Jr. This includes the Wushu lessons and soccer league fee. He also got some new clothes and shoes.
Bills: $239. Electricity and insurance (auto, home, term life, and umbrella).
Entertainment: $129. We ate out quite a few times in April. This category also includes my gym membership fee.
Misc: $238. Portland city tax and 2 pans from Amazon.
YTD Extra Savings: $24,519
April was a very good month and we saved $5,596. Our income exceeded our expenses by a large margin and it is great! This is when you feel rich, when you have plenty of positive cash flow. So far in 2017, we saved $24,519 extra. This is already more than the whole 2016 so we’re doing really well this year.
Part of this extra savings will be sent to our Roth IRA later. We’ll probably hold the rest in cash while we search for other investment opportunities.
Can Mrs. RB40 retire?
This is a new section I’m adding for 2017. I want to see what happens if Mrs. RB40 stops working full-time. Basically, I will remove Mrs. RB40’s income from our spreadsheet and stop contributing to our tax-advantaged accounts.
Drum roll please … for April 2017, Mrs. RB40 could retire early! We had another great month and it would be awesome if we can keep this up for the rest of the year.
If we remove Mrs. RB40’s income from the spreadsheet, we’d still be ahead $4,683 in April! This is due to our excellent online income. 2017 is looking really good so far.
April 2017 wrap up
April 2017 was another great month at the RB40 household. Our income streams were firing on all cylinders and our expenses were reasonable. Everything is just going really well. We haven’t had a great streak like this in a long time so we feel good. Usually, our finances has more ups and downs.
Now, let’s go on to May. I’ll start the redesign process on Fit by 40 first to get up to speed. This will let me take my time to experiment while keeping Retire by 40 stable. Once I have the process down, I’ll update Retire by 40. This will probably take a while to accomplish because I don’t have a lot of time to dedicate to this. It’s a lot of work.
Did you have a good April?
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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